Banks, broccoli and the danger of going out on a date

M&S have removed expiry dates from their food – a welcome move, no doubt, but what’s that got to do with banks?

Like broccoli, a bank can expire before anyone knows it

Well – to stretch a Forrest Gump quote – a bank is like an M&S broccoli manager. Reliable, functional – important, even – but a) not something that always excites consumers and b) something that can expire before anyone realizes it. To solve both problems, banks can look to partnerships.

Partnerships are not a new feature in the industry – and we see more of them popping up every single day. Santander recently announced a partnership with SAP Spain to support digitization and improve the onboarding process for new customers, while Morocco’s Attijariwafa Bank launched a partnership with Thunes to power their cross-border payments.

To understand the importance of partnerships, it helps to understand the challenges facing banks: an increasing number of threats and competitors, a customer base that is becoming more open to new providers and a stretched pool of resources to respond to these problems.

Partnerships help to solve these problems. By partnering with a fintech specialist, a bank can improve its services without having to dedicate significant costs and efforts to doing so. This is particularly useful when partnerships target services outside of a bank’s core offering, meaning that banks can then focus on the services they deliver best. Without this action, banks risk becoming unattractive and, even worse, dated. Customers will go elsewhere for an increasing number of services.

These are provided by fintechs who, unlike banks, are able to specialize, relatively unencumbered by bureaucratic processes and risk-averse cultures, and are able to step in quickly to solve customers’ unmet needs. The more customers move away from their traditional banking providers and towards these fintechs, the more they expect to be offered new ways to seamlessly manage their money in a way that works for them, creating long-term risk for banks.

These departing customers are often people who might otherwise stay with their existing provider, but are frustrated or fed up with some aspect of the banking process. For example, businesses looking to support employees through the cost of living crisis can turn to fintechs to run their payroll and let people choose the day they get paid, helping them get through the month. Many may also prefer to stick with digital banks after the pandemic as an alternative to visiting a branch in person. These providers are more enticing than a bank that, to use the broccoli analogy again, is becoming obsolete.

Partnerships help keep banks healthy. When banks turn to partnerships, innovation ceases to be a costly or complicated process. In fact, partnerships are a fast-track ticket through the development costs and growing pains of building infrastructure in-house. They allow banks to launch new features in a matter of months and leverage the support of an external team fully dedicated to the integration, meaning minimal effort is required to achieve great results.

Through something as simple as an API integration, banks can offer new products that make customers’ lives easier and keep them engaged and happy to use their services again. And integrations are not just added value for customers – the time and money they save are also converted into added value for a bank’s business.

Partnerships are a proven solution that allows banks to navigate growth and overcome barriers to innovation. Those who take advantage of partnerships now will retain and grow their customer base and ensure longevity in an increasingly competitive market. Procrastinators risk ending up like a head of M&S broccoli that spent a day too long in the fridge – you can still use it, but you’ll know it’s a little past its true potential.

About the author:

Prasangi Unantenne is implementation manager at Wise Platform. She has 15 years of experience in financial services across a range of roles, including product management, business development and operations.